Management, 3e (Hitt)
Chapter 14 Control
1) In an organizational setting, to “control” means to adjust or bring about conformity to
specifications or objectives that have been set.
2) Extensive control measures almost always deflate employee morale and lower profitability,
irrespective of the situation.
3) A manager can control without restricting.
4) As the complexity of a task increases and its assessment standards become more abstract,
there will be a higher potential that performance measurement will cause confusion.
5) Research on goal setting related to the budgetary process suggests that the ideal budget is one
that is not challenging and is easily attainable.
6) An organization cannot run without formulating and implementing a budget.
7) Companies that have rejected budgets require employees to measure themselves against the
performance of competitors against internal peer groups.
8) When readily quantifiable criteria do not exist, it becomes extremely important to obtain as
much consensus as possible about the way in which performance is to be assessed.
9) Regardless of cost, performance measurement should always be comprehensive.
10) Managers should take reinforcing action when actual performance is worse than expected
and corrective action when actual performance is better than expected.
11) Sales that do not meet their forecast may mean that production should be increased or the
product line should be extended.
12) No hard-and-fast boundaries separate strategic, operational, and tactical controls.
13) When managers predict a turbulent external environment, they should establish centralized
strategic control systems to anchor the firm.
14) The external environment is the least significant factor affecting whether a strategic control
system can be set up.
15) Tactical controls involve the fundamental control arrangements of the organization, those
with which its members have to live day to day.
16) The financial ratio of liquidity indicates how well the organization can meet its long-term
financial obligations.
17) The break-even point is the amount of a product that must be sold to cover a firm’s fixed and
variable costs.
18) A budget is designed to influence behavior so that forecasts or plans for expenditures and
revenues can be achieved.
19) Supervisory structure is a type of strategic control based on the organization’s overall
approach to utilizing its human resources.
20) Selection, training, compensation, and appraisal and evaluation are all opportunities for
control in the human resource function.
21) Shared values and beliefs are the social requirements needed to support a system of
bureaucratic control.
22) Administering therapy to an unwell patient is an example of exercising tactical control.
23) The contemporary approach to operational control involves shifting the responsibility for
control away from operations personnel toward separate evaluators at the end of the production
process.
24) Planning and control do not have to be linked together in organizations.
25) The guiding principle for focusing control is that it should be closely linked to the strategic
goals and, particularly, the planning process of the organization.
26) Which of the following is an outcome of too much organizational control?
A) lowered motivation
B) exposure to risks
C) low quality operations
D) ineffective utilization of resources
27) Within the context of organizations, control involves ________.
A) arranging the organization’s workforce in some sequence
B) tracking flow of transactions across different organizational departments
C) regulating activities and behaviors to accomplish specific organizational objectives
D) grouping of tasks into different organizational departments
28) Control can be thought of as a causal variable because ________.
A) the results of control efforts cannot be negative or harmful for any organization
B) the results of control efforts can inform and improve the planning process of the organization
C) the results of control efforts dictate the structures of all other organizations within an industry.
D) the results of control efforts are in no way related to planning and organizing.
29) The first step of the control process in an organizational setting is ________.
A) comparing performance to standard
B) measuring performance
C) establishing standards
D) evaluating performance
30) The first step in the control process is dependent on the existence of ________.
A) a favorable cost-benefit ratio
B) the department of human resources
C) the absence of well-defined performance yardsticks
D) as much specificity as possible so that standards are not vague
31) Which of the following best defines “standard” in relation to establishing control?
A) performance target
B) unbiased evaluation
C) parallel association
D) rival strategies
32) Which of the following is a reason for involving in decision making the people who are
going to be affected by its results?
A) The decision-making process will not be partial or biased toward anyone.
B) They will be more committed to meeting standards that they themselves have created.
C) The degree of difficulty will neither be too difficult nor too ambitious.
D) They will be more accepting of losses and failures if they are involved from the start.
33) A key feature of many companies that have ________ is the use of rolling forecasts, which
are created every few months.
A) restricted employee participation
B) established benchmarks
C) increased turnover rates
D) rejected budgets
34) How can measurement of performance be facilitated?
A) by imitating rival’s methods
B) by setting concrete standards
C) by providing major incentives
D) by reducing hours of work
35) Achievable budget standards are regarded as desirable because ________.
A) they focus only on long-term actions at the expense of short-term objectives
B) they are not too challenging for the company
C) they reduce the motivation to manipulate data
D) they reduce uncertainty and keep employee morale under check
36) Companies that use “stage gate” control technology divide projects into several stages with
gates between them. The gates act as comprehensive quality control checks that have to be
passed before a gate will open. Managers measure performance at the end of each stage to decide
whether the project should move forward. Which of the following is a drawback of this
technology?
A) gaining no up-front commitment to the performance measurement methods
B) Reviewing the project at each stage may lead to overanalysis and underperformance.
C) achieving low consensus between assessments about performance
D) Promising new projects might be killed too soon by overeager, stage gate keepers.
37) Which of the following statements is true about measuring performance?
A) Usefulness of the information always justifies the cost of measurement.
B) Measurements of performance need not always be related to organizational goals.
C) Ease of measurement determines what is going to be measured.
D) Relevant indicators of progress toward goals justify the costs of measurement.
38) ________ is usually the most difficult managerial task in the control process.
A) Comparing performance to standards
B) Establishing standards
C) Evaluating and taking corrective action
D) Measuring performance
39) FoodMart Inc. is a grocery supermarket chain with 65 stores in various locations across the
country. For the past year, total revenues have been steadily declining, and the management
wants to make some changes to try and improve earnings. According to the CEO of the
company, shutting down the 10 lowest performing stores should remedy the situation. Which of
the following is the strongest counterargument for the above?
A) Eighty percentage of the workforce in the stores is constituted of contracted laborers.
B) Most of the retail stores that the company has are located in high rental demand areas.
C) A recent analysis by the operations department suggests that implementing a vendor managed
inventory system would significantly reduce the operating costs.
D) A recent study reveals that inventory and transportation costs contribute up to 70 percent of
the total operating costs.
40) In which of the following cases is the need for change the least?
A) when the difference between performance and standard is negative
B) No difference exists between performance and standard.
C) when the difference between performance and standard is positive
D) There is no well-defined standard to measure performance by.
41) Upon discovering stronger-than-expected sales of its product, a manufacturer of baby food
finds that senior citizens who wear dentures are buying the meals meant for toddlers.
Consequently, the firm targets a new line of packaged meals to senior citizens. This case
suggests managers should always ________.
A) investigate positive differences between performance and standards
B) collapse similar, small market segments into one larger segment
C) design each product for maximum adjustability
D) market every product to multiple customer segments
42) Which of the following is a reinforcing action that could be taken based on the outcomes of
performance measurement?
A) increase in training
B) addition of a new product line
C) modification in supervision
D) investment in newer equipment
43) Which of the following is a corrective action that could be taken based on the outcomes of
performance measurement?
A) increase in training
B) increase in recognition
C) addition of a new product line
D) increase in production targets
44) High-performing employees in an organization can be retained by ________.
A) close monitoring
B) increased recognition
C) increased workload
D) increased feedback
45) Sales of photocopy machines manufactured by Xenon Ltd. have declined substantially,
resulting in lower revenues. Most members of the core executive group blame unrealistic goals
for this outcome. Which of the following is the strongest counterargument for this?
A) More revenue is being earned through service contracts than sales.
B) Competitors of Xenon are also facing a similar problem.
C) Cost of labor has increased slightly in the past year.
D) Broad-based participation was used in setting the standards.
46) Which of the following represents the narrowest scope of control for a bank branch
manager?
A) ensuring that there is an adequate ratio of deposits relative to loans
B) ensuring proper credit checking before a loan is granted to any individual or organization
C) ensuring that the bank gets enough publicity to attract new clientele
D) ensuring that there is a fair ratio of human tellers to automated tellers present
47) What determines whether a control is considered operational, tactical, or strategic?
A) its industry
B) its breadth of scope
C) its effect on profitability
D) its implementation schedule
48) Which type of control has the broadest organizational scope?
A) diagnostic
B) operational
C) strategic
D) tactical
49) Which of the following assessments carried out by the manager of a chain of used-car
dealerships has the largest scope?
A) deciding upon suitable advertising for the next fiscal year
B) deciding whether to start another dealership in an area with a growing population
C) deciding how much inventory to carry in each dealership and the whole company
D) deciding on the appropriate number of sales staff for each dealership
50) Which of the following questions is a matter of strategic scope for an organization?
A) What changes have to be made, in terms of policy, at the new manufacturing units in China?
B) How much money is to be allocated to the sales and marketing departments annually?
C) How can the ratio of employees to supervisors be improved to increase productivity?
D) What can be done to employ more ethnic and gender minorities in the organization?
51) Research indicates that the efficiencies of managing through centralized control may be
________ when the operating environments of divisions in multidivisional organizations are
relatively ________.
A) greater; stable and predictable
B) static; stable and predictable
C) greater; turbulent and unpredictable
D) static; turbulent and unpredictable
52) Which of the following is a critical decision in the context of the environmental conditions in
which large companies operate?
A) how flexible to make the budget
B) how centralized or decentralized should the control systems be
C) how much to invest in precontrol systems for operations
D) how to fund the budget for the training and development department
53) When there is more uncertainty in the environment, centralized control becomes ________.
A) crucial
B) more efficient
C) redundant
D) less efficient
54) Arbery Fudge Company, Inc. engages in the production and marketing of fudge candy in the
United States. The company believes in continuous improvement and constantly evaluates the
effectiveness of the control strategies that the managers use. Which of the following situations
would necessitate the use strategic control for evaluation?
A) The organization wants to implement a system for formalizing reporting at various levels in
an organization.
B) The organization has to perform a task in a relatively limited time frame to help one of its key
distributors make use of an important opportunity.
C) The competition in the confectionery market has increased significantly in the recent past and
management is planning to revamp its competitive approaches.
D) The organization has current liabilities greater than the current assets. The managers are
analyzing the situation to make a decision on whether or not to increase liquidity.
55) A strategic control system is likely to be useful when environmental turbulence is ________
and it is ________ to specify and measure precise strategic objectives.
A) high; easy
B) low; difficult
C) high; difficult
D) low; easy
56) Which of the following is true of strategic controls?
A) They are least useful when the environment is uncertain.
B) They are unrelated to measures of organizational performance.
C) They are most useful when operating environments are rough.
D) They are easy to implement even when exact measurement is difficult.
57) In which of the following organizations will strategic controls work the best?
A) in a company designing the user interface of mobile phones, where every month the
technology improves and new competitors enter the market
B) in an iron and steel industry whose business prospects depend largely on the ups and downs
of the construction industry
C) in a company that provides counseling services to corporate clients and has infrequent
performance audits
D) in a hotel chain where customer satisfaction and volatile money market determines the
number and type of clientele
58) Tactical control focuses on ________.
A) implementing strategy
B) regulating activities
C) managing methods
D) planning policies
59) Department A shows an annual after-tax profit of $400,000 from invested assets of $12
million. Department B shows an annual after-tax profit of $400,000 from invested assets of $8
million. Which unit had the best financial performance?
A) Department A performed the best.
B) Department B performed the best.
C) Both departments had the same financial performance.
D) Performance cannot be determined from these statistics.